Quiz 9: Application: International Trade
Business
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True False
False
Q 2Q 2
The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.
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True False
True
Q 3Q 3
According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.
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True False
True
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True False
Q 5Q 5
If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.
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True False
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True False
Q 7Q 7
The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy.If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound,then Aviana should export goose meat.
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True False
Q 8Q 8
If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off,and Argentina's consumers of oranges are better off,as a result of trade.
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True False
Q 9Q 9
If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.
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True False
Q 10Q 10
When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.
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True False
Q 11Q 11
If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.
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True False
Q 12Q 12
If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.
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True False
Q 13Q 13
In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.
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True False
Q 14Q 14
Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.
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True False
Q 15Q 15
The small-economy assumption is necessary to analyze the gains and losses from international trade.
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True False
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True False
Q 17Q 17
If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.
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True False
Q 18Q 18
When a government imposes a tariff on a product,the domestic price will equal the world price.
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True False
Q 19Q 19
A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.
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True False
Q 20Q 20
When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel,then the domestic price of steel will increase as a result.
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True False
Q 21Q 21
When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off.
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True False
Q 22Q 22
When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.
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True False
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True False
Q 24Q 24
If a small country imposes a tariff on an imported good,domestic sellers will gain producer surplus,the government will gain tariff revenue,and domestic consumers will gain consumer surplus.
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True False
Q 25Q 25
Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.
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True False
Q 26Q 26
The imposition of a tariff on imported wine will increase the domestic price of wine,decrease the quantity of wine imported,and increase the quantity of wine produced domestically.
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True False
Q 27Q 27
Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.
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True False
Q 28Q 28
Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.
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True False
Q 29Q 29
Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade,thus reducing the gains from trade.
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True False
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True False
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True False
Q 32Q 32
Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.
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True False
Q 33Q 33
Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.
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True False
Q 34Q 34
Most economists support the infant-industry argument because it is so easy to implement in practice.
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True False
Q 35Q 35
If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.
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True False
Q 36Q 36
Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.
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True False
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True False
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True False
Q 39Q 39
The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).
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True False
Q 40Q 40
A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.
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True False
Q 41Q 41
The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.
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True False
Q 42Q 42
The results of a 2007 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.
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True False
Q 43Q 43
Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.
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True False
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Essay
Q 45Q 45
Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?
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Essay
Q 46Q 46
What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.
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Essay
Q 47Q 47
An important factor in the decline of the U.S.textile industry over the past 100 or so years is
A) foreign competitors that can produce quality textile goods at low cost.
B) lower prices of goods that are substitutes for clothing.
C) a decrease in Americans' demand for clothing,due to increased incomes and the fact that clothing is an inferior good.
D) the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living.
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Multiple Choice
Q 48Q 48
With which of the Ten Principles of Economics is the study of international trade most closely connected?
A) People face tradeoffs.
B) Trade can make everyone better off.
C) Governments can sometimes improve market outcomes.
D) Prices rise when the government prints too much money.
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Multiple Choice
Q 49Q 49
Which of the following tools and concepts is useful in the analysis of international trade?
A) total surplus
B) domestic supply
C) equilibrium price
D) All of the above are correct.
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Multiple Choice
Q 50Q 50
A logical starting point from which the study of international trade begins is
A) the recognition that not all markets are competitive.
B) the recognition that government intervention in markets sometimes enhances the economic welfare of the society.
C) the principle of absolute advantage.
D) the principle of comparative advantage.
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Multiple Choice
Q 51Q 51
What is the fundamental basis for trade among nations?
A) shortages or surpluses in nations that do not trade
B) misguided economic policies
C) absolute advantage
D) comparative advantage
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Multiple Choice
Q 52Q 52
Patterns of trade among nations are primarily determined by
A) cultural considerations.
B) political considerations.
C) comparative advantage.
D) differences in the income elasticity of demand among nations.
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Multiple Choice
Q 53Q 53
The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of beef.In other countries,you can buy 1 pound of fish for 1.5 pounds of beef.These facts indicate that
A) Pineland has a comparative advantage,relative to other countries,in producing fish.
B) other countries have a comparative advantage,relative to Pineland,in producing beef.
C) the price of beef in Pineland exceeds the world price of beef.
D) if Pineland were to allow trade,it would import fish.
Free
Multiple Choice
Q 54Q 54
The nation of Waterland forbids international trade.In Waterland,you can obtain a computer by trading 2 bicycles.In other countries,you can obtain a computer by trading 3 bicycles.These facts indicate that
A) if Waterland were to allow trade,it would export computers.
B) Waterland has an absolute advantage,relative to other countries,in producing computers.
C) Waterland has a comparative advantage,relative to other countries,in producing bicycles.
D) All of the above are correct.
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Multiple Choice
Q 55Q 55
The principle of comparative advantage asserts that
A) not all countries can benefit from trade with other countries.
B) the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good.
C) countries can become better off by exporting goods,but they cannot become better off by importing goods.
D) countries can become better off by specializing in what they do best.
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Multiple Choice
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Multiple Choice
Q 57Q 57
A tariff is a
A) limit on how much of a good can be exported.
B) limit on how much of a good can be imported.
C) tax on an exported good.
D) tax on an imported good.
Free
Multiple Choice
Q 58Q 58
The price of a good that prevails in a world market is called the
A) absolute price.
B) relative price.
C) comparative price.
D) world price.
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Multiple Choice
Q 59Q 59
The price of sugar that prevails in international markets is called the
A) export price of sugar.
B) import price of sugar.
C) comparative-advantage price of sugar.
D) world price of sugar.
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Multiple Choice
Q 60Q 60
If a country allows trade and,for a certain good,the domestic price without trade is higher than the world price,
A) the country will be an exporter of the good.
B) the country will be an importer of the good.
C) the country will be neither an exporter nor an importer of the good.
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.
Free
Multiple Choice
Q 61Q 61
If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,
A) the country will be an exporter of the good.
B) the country will be an importer of the good.
C) the country will be neither an exporter nor an importer of the good.
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.
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Multiple Choice
Q 62Q 62
For any country,if the world price of zinc is higher than the domestic price of zinc without trade,that country should
A) export zinc,since that country has a comparative advantage in zinc.
B) import zinc,since that country has a comparative advantage in zinc.
C) neither export nor import zinc,since that country cannot gain from trade.
D) neither export nor import zinc,since that country already produces zinc at a low cost compared to other countries.
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Multiple Choice
Q 63Q 63
If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam
A) should import textiles.
B) has a comparative advantage in textiles.
C) should produce just enough textiles to meet its domestic demand.
D) should refrain altogether from producing textiles.
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Multiple Choice
Q 64Q 64
Assume,for Singapore,that the domestic price of soybeans without international trade is higher than the world price of soybeans.This suggests that,in the production of soybeans,
A) Singapore has a comparative advantage over other countries and Singapore will import soybeans.
B) Singapore has a comparative advantage over other countries and Singapore will export soybeans.
C) other countries have a comparative advantage over Singapore and Singapore will import soybeans.
D) other countries have a comparative advantage over Singapore and Singapore will export soybeans.
Free
Multiple Choice
Q 65Q 65
Assume,for the U.S. ,that the domestic price of beef without international trade is lower than the world price of beef.This suggests that,in the production of beef,
A) the U.S.has a comparative advantage over other countries and the U.S.will export beef.
B) the U.S.has a comparative advantage over other countries and the U.S.will import beef.
C) other countries have a comparative advantage over the U.S.and the U.S.will export beef.
D) other countries have a comparative advantage over the U.S.and the U.S.will import beef.
Free
Multiple Choice
Q 66Q 66
Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that
A) the United States has a comparative advantage relative to Switzerland in producing cheese,and France has a comparative advantage relative to the United States in producing cars.
B) the United States has a comparative advantage relative to France in producing cars,and Switzerland has a comparative advantage relative to the United States in producing cheese.
C) the United States has an absolute advantage relative to Switzerland in producing cheese,and France has an absolute advantage relative to the United States in producing cars.
D) the United States has an absolute advantage relative to France in producing cars,and Switzerland has an absolute advantage relative to the United States in producing cheese.
Free
Multiple Choice
Q 67Q 67
Trade among nations is ultimately based on
A) absolute advantage.
B) strategic advantage.
C) comparative advantage.
D) technical advantage.
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Multiple Choice
Q 68Q 68
A country has a comparative advantage in a product if the world price is
A) lower than that country's domestic price without trade.
B) higher than that country's domestic price without trade.
C) equal to that country's domestic price without trade.
D) not subject to manipulation by organizations that govern international trade.
Free
Multiple Choice
Q 69Q 69
Suppose Puerto Rico has a comparative advantage over other countries in producing sugar,but other countries have an absolute advantage over Puerto Rico in producing sugar.If trade in sugar is allowed,Puerto Rico
A) will import sugar.
B) will export sugar.
C) will either export sugar or export sugar,but it is not clear from the given information.
D) would have nothing to gain either from exporting or importing sugar.
Free
Multiple Choice
Q 70Q 70
Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti
A) will import oranges.
B) will export oranges.
C) will either export oranges or export oranges,but it is not clear from the given information.
D) would have nothing to gain either from exporting or importing oranges.
Free
Multiple Choice
Q 71Q 71
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 72Q 72
When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country
A) cannot experience significant gains or losses by trading with other countries.
B) cannot have a significant comparative advantage over other countries.
C) cannot affect world prices by trading with other countries.
D) All of the above are correct.
Free
Multiple Choice
Q 73Q 73
When,in our analysis of the gains and losses from international trade,we assume that a particular country is small,we are
A) assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries.
B) assuming there is no demand for that country's domestically-produced goods by other countries.
C) assuming international trade can benefit producers,but not consumers,in that country.
D) making an assumption that is not necessary to analyze the gains and losses from international trade.
Free
Multiple Choice
Q 74Q 74
In analyzing international trade,we often focus on a country whose economy is small relative to the rest of the world.We do so
A) because it is impossible to analyze the gains and losses from international trade without making this assumption.
B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade.
C) in order to rule out the possibility of tariffs or quotas.
D) All of the above are correct.
Free
Multiple Choice
Q 75Q 75
In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that
A) Moldova can only import goods;it cannot export goods.
B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage.
C) only the domestic price of a good is relevant for Moldova;the world price of a good is irrelevant.
D) Moldova is a price taker.
Free
Multiple Choice
Q 76Q 76
When a country allows trade and becomes an exporter of a good,
A) domestic producers gain and domestic consumers lose.
B) domestic producers lose and domestic consumers gain.
C) domestic producers and domestic consumers both gain.
D) domestic producers and domestic consumers both lose.
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Multiple Choice
Q 77Q 77
Trade enhances the economic well-being of a nation in the sense that
A) both domestic producers and domestic consumers of a good become better off with trade,regardless of whether the nation imports or exports the good in question.
B) the gains of domestic producers of a good exceed the losses of domestic consumers of a good,regardless of whether the nation imports or exports the good in question.
C) trade results in an increase in total surplus.
D) trade puts downward pressure on the prices of all goods.
Free
Multiple Choice
Q 78Q 78
When a country allows trade and becomes an importer of a good,
A) both domestic producers and domestic consumers become better off.
B) domestic producers become better off,and domestic consumers become worse off.
C) domestic producers become worse off,and domestic consumers become better off.
D) both domestic producers and domestic consumers become worse off.
Free
Multiple Choice
Q 79Q 79
When a country allows trade and becomes an importer of a good,
A) everyone in the country benefits.
B) the gains of the winners exceed the losses of the losers.
C) the losses of the losers exceed the gains of the winners.
D) everyone in the country loses.
Free
Multiple Choice
Q 80Q 80
When the nation of Worldova allows trade and becomes an exporter of silk,
A) residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova rises.
B) residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova falls.
C) residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova rises.
D) residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova falls.
Free
Multiple Choice
Q 81Q 81
When the nation of Duxembourg allows trade and becomes an importer of software,
A) residents of Duxembourg who produce software become worse off;residents of Duxembourg who buy software become better off;and the economic well-being of Duxembourg rises.
B) residents of Duxembourg who produce software become worse off;residents of Duxembourg who buy software become better off;and the economic well-being of Duxembourg falls.
C) residents of Duxembourg who produce software become better off;residents of Duxembourg who buy software become worse off;and the economic well-being of Duxembourg rises.
D) residents of Duxembourg who produce software become better off;residents of Duxembourg who buy software become worse off;and the economic well-being of Duxembourg falls.
Free
Multiple Choice
Q 82Q 82
When a nation first begins to trade with other countries and the nation becomes an importer of corn,
A) this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade.
B) this is an indication that the nation has a comparative advantage in producing corn.
C) the nation's consumers of corn become better off and the nation's producers of corn become worse off.
D) All of the above are correct.
Free
Multiple Choice
Q 83Q 83
When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,
A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade.
B) this is an indication that the nation has a comparative advantage in producing soybeans.
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off.
D) All of the above are correct.
Free
Multiple Choice
Q 84Q 84
Trade raises the economic well-being of a nation in the sense that
A) the gains of the winners exceed the losses of the losers.
B) everyone in an economy gains from trade.
C) since countries can choose what products to trade,they will pick those products that are most beneficial to society.
D) the nation joins the international community when it begins to engage in trade.
Free
Multiple Choice
Q 85Q 85
When a country allows trade and becomes an exporter of a good,
A) the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good.
B) the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good.
C) the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good.
D) the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.
Free
Multiple Choice
Q 86Q 86
When a country allows trade and becomes an importer of steel,
A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel.
B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel.
C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel.
D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.
Free
Multiple Choice
Q 87Q 87
When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?
A) The price paid by domestic consumers of the good increases.
B) The price received by domestic producers of the good increases.
C) The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
D) The gains of domestic producers of the good exceed the losses of domestic consumers of the good.
Free
Multiple Choice
Q 88Q 88
When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence?
A) The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water.
B) The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water.
C) The price paid by domestic consumers of bottled water decreases.
D) The price received by domestic producers of bottled water decreases.
Free
Multiple Choice
Q 89Q 89
When a country allows trade and becomes an exporter of a good,
A) consumer surplus and producer surplus both increase.
B) consumer surplus and producer surplus both decrease.
C) consumer surplus increases and producer surplus decreases.
D) consumer surplus decreases and producer surplus increases.
Free
Multiple Choice
Q 90Q 90
When a country allows trade and becomes an importer of a good,
A) consumer surplus and producer surplus both increase.
B) consumer surplus and producer surplus both decrease.
C) consumer surplus increases and producer surplus decreases.
D) consumer surplus decreases and producer surplus increases.
Free
Multiple Choice
Q 91Q 91
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.From the figure it is apparent that
A) New Zealand will experience a shortage of wool if trade is not allowed.
B) New Zealand will experience a surplus of wool if trade is not allowed.
C) New Zealand has a comparative advantage in producing wool,relative to the rest of the world.
D) foreign countries have a comparative advantage in producing wool,relative to New Zealand.
Free
Multiple Choice
Q 92Q 92
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.From the figure it is apparent that
A) New Zealand will export wool if trade is allowed.
B) New Zealand will import wool if trade is allowed.
C) New Zealand has nothing to gain either by importing or exporting wool.
D) the world price will fall if New Zealand begins to allow its citizens to trade with other countries.
Free
Multiple Choice
Q 93Q 93
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.With trade,New Zealand will
A) export 11 units of wool.
B) export 5 units of wool.
C) import 15 units of wool.
D) import 6 units of wool.
Free
Multiple Choice
Q 94Q 94
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in New Zealand is
A) $15.
B) $45.
C) $55.
D) $70.
Free
Multiple Choice
Q 95Q 95
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area
A) A + B + C.
B) A + B + C + D + F.
C) A + B + C + D + F + G.
D) A + B + C + D + F + G + H.
Free
Multiple Choice
Q 96Q 96
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in New Zealand
A) increases by the area B + D.
B) increases by the area C + F.
C) decreases by the area B + D.
D) decreases by the area D + G.
Free
Multiple Choice
Q 97Q 97
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.When trade in wool is allowed,producer surplus in New Zealand
A) increases by the area B + D.
B) increases by the area B + D + G.
C) decreases by the area C + F.
D) decreases by the area G.
Free
Multiple Choice
Q 98Q 98
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.When trade is allowed,
A) New Zealand producers of wool become better off and New Zealand consumers of wool become worse off.
B) New Zealand consumers of wool become better off and New Zealand producers of wool become worse off.
C) both New Zealand producers and consumers of wool become better off.
D) both New Zealand producers and consumers of wool become worse off.
Free
Multiple Choice
Q 99Q 99
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.Relative to the no-trade situation,trade with the rest of the world results in
A) New Zealand consumers paying a higher price for wool.
B) a decrease in producer surplus in New Zealand.
C) a decrease in total surplus in New Zealand.
D) All of the above are correct.
Free
Multiple Choice
Q 100Q 100
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.In the absence of trade,total surplus in the New Zealand wool market amounts to
A) 187.5
B) 275.0
C) 378.5
D) 412.5
Free
Multiple Choice
Q 101Q 101
Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.With trade,total surplus in the New Zealand wool market amounts to
A) 312.5.
B) 367.0.
C) 467.5.
D) 495.0.
Free
Multiple Choice
Q 102Q 102
Which of the following statements is true?
A) Free trade benefits a country when it exports but harms it when it imports.
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S.tariffs placed on Canadian hog exports.
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses,whereas quotas do not impose deadweight losses.
D) Free trade benefits a country both when it exports and when it imports.
Free
Multiple Choice
Q 103Q 103
When a country allows international trade and becomes an exporter of a good,
A) domestic producers of the good become better off.
B) domestic consumers of the good become worse off.
C) the gains of the winners exceed the losses of the losers.
D) All of the above are correct.
Free
Multiple Choice
Q 104Q 104
Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result,
A) consumer surplus of Scottish consumers of wool increases.
B) producer surplus of Scottish producers of wool increases.
C) total surplus of Scottish wool consumers and producers remains constant.
D) it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production.
Free
Multiple Choice
Q 105Q 105
When a country allows international trade and becomes an importer of a good,
A) domestic producers of the good become better off.
B) domestic consumers of the good become worse off.
C) the gains of the winners exceed the losses of the losers.
D) All of the above are correct.
Free
Multiple Choice
Q 106Q 106
Assume,for France,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that
A) other countries have a comparative advantage over France in producing tea.
B) France has an absolute advantage over other countries in producing tea.
C) France will export tea if international trade is allowed.
D) French tea buyers will become worse off if international trade is allowed.
Free
Multiple Choice
Q 107Q 107
Suppose a country begins to allow international trade in steel.Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?
A) The sum of consumer surplus and producer surplus for domestic traders of steel increases.
B) The quantity of steel demanded by domestic consumers increases.
C) Domestic producers of steel receive a higher price for steel.
D) The losses of the losers exceed the gains of the winners.
Free
Multiple Choice
Q 108Q 108
After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,
A) the domestic price of coffee will be greater than the world price of coffee.
B) the domestic price of coffee will be lower than the world price of coffee.
C) the domestic price of coffee will equal the world price of coffee.
D) The world price of coffee does not matter;the domestic price of coffee prevails.
Free
Multiple Choice
Q 109Q 109
Within a country,the domestic price of a product will equal the world price if
A) trade restrictions are imposed on the product.
B) the country allows free trade.
C) the country chooses to import,but not export,the product.
D) the country chooses to export,but not import,the product.
Free
Multiple Choice
Q 110Q 110
The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began
A) importing calculators and the price of a calculator in Singapore increased to $5.00.
B) importing calculators and the price of a calculator in Singapore remained at $4.00.
C) exporting calculators and the price of a calculator in Singapore increased to $5.00.
D) exporting calculators and the price of a calculator in Singapore remained at $4.00.
Free
Multiple Choice
Q 111Q 111
The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began
A) exporting T-bone steak and the price per pound in Latvia remained at $7.50.
B) exporting T-bone steak and the price per pound in Latvia increased to $9.00.
C) importing T-bone steak and the price per pound in Latvia remained at $7.50.
D) importing T-bone steak and the price per pound in Latvia increased to $9.00.
Free
Multiple Choice
Q 112Q 112
Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then
A) that country becomes an exporter of beans.
B) that country has a comparative advantage in producing beans.
C) at the world price,the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country.
D) All of the above are correct.
Free
Multiple Choice
Q 113Q 113
Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then
A) that country becomes an importer of pistachios.
B) that country has a comparative advantage in producing pistachios.
C) at the world price,the quantity of pistachios supplied in that country exceeds the quantity of pistachios demanded in that country.
D) All of the above are correct.
Free
Multiple Choice
Q 114Q 114
Figure 9-2
-Refer to Figure 9-2.Without trade,consumer surplus is
A) $210.
B) $245.
C) $455.
D) $490.
Free
Multiple Choice
Q 115Q 115
Figure 9-2
-Refer to Figure 9-2.Without trade,producer surplus is
A) $210.
B) $245.
C) $455.
D) $490.
Free
Multiple Choice
Q 116Q 116
Figure 9-2
-Refer to Figure 9-2.With free trade,this country will
A) import 40 baskets.
B) import 70 baskets.
C) export 35 baskets.
D) export 65 baskets.
Free
Multiple Choice
Q 117Q 117
Figure 9-2
-Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be
A) $10 and 40 baskets will be sold domestically.
B) $10 and 105 baskets will be sold domestically.
C) $7 and 70 baskets will be sold domestically.
D) $7 and 40 baskets will be sold domestically.
Free
Multiple Choice
Q 118Q 118
Figure 9-2
-Refer to Figure 9-2.With free trade,consumer surplus is
A) $45.
B) $80.
C) $210.
D) $245.
Free
Multiple Choice
Q 119Q 119
Figure 9-2
-Refer to Figure 9-2.With free trade,producer surplus is
A) $80.00.
B) $210.00.
C) $245.50.
D) $472.50.
Free
Multiple Choice
Q 120Q 120
Figure 9-2
-Refer to Figure 9-2.As a result of trade,total surplus increases by
A) $80.
B) $97.50.
C) $162.50.
D) $495.50.
Free
Multiple Choice
Q 121Q 121
Figure 9-2
-Refer to Figure 9-2.This country
A) has a comparative advantage in baskets.
B) should export baskets.
C) is a price taker in the world economy.
D) All of the above are correct.
Free
Multiple Choice
Q 122Q 122
Figure 9-2
-Refer to Figure 9-2.The world price for baskets represents
A) the demand for baskets from the rest of the world.
B) the supply of baskets from the rest of the world.
C) the level of inefficiency in the domestic market caused by trade.
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.
Free
Multiple Choice
Q 123Q 123
Figure 9-2
-Refer to Figure 9-2.At the world price and with free trade,
A) the domestic quantity of baskets demanded is greater than the domestic quantity of baskets supplied.
B) the basket market is in equilibrium.
C) the domestic demand for baskets is perfectly inelastic.
D) both domestic producers of baskets and domestic consumers of baskets are better off than they were without free trade.
Free
Multiple Choice
Q 124Q 124
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.With no international trade,
A) the equilibrium price is $12 and the equilibrium quantity is 300.
B) the equilibrium price is $16 and the equilibrium quantity is 200.
C) the equilibrium price is $16 and the equilibrium quantity is 300.
D) the equilibrium price is $16 and the equilibrium quantity is 450.
Free
Multiple Choice
Q 125Q 125
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy,
A) Chinese producers of pencil sharpeners would become worse off.
B) Chinese consumers of pencil sharpeners would become better off.
C) total surplus in the Chinese economy would increase.
D) All of the above are correct.
Free
Multiple Choice
Q 126Q 126
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.With trade,China will
A) import 100 pencil sharpeners.
B) import 250 pencil sharpeners.
C) export 150 pencil sharpeners.
D) export 250 pencil sharpeners.
Free
Multiple Choice
Q 127Q 127
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.With trade,producer surplus in China is
A) $800.
B) $1,200.
C) $1,800.
D) $2,700.
Free
Multiple Choice
Q 128Q 128
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.Relative to a no-trade situation,which of the following comes with trade?
A) Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
B) Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
C) Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
D) Total surplus increases by $400.
Free
Multiple Choice
Q 129Q 129
Figure 9-3.The domestic country is China.
-Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is
A) $400.
B) $500.
C) $600.
D) $750.
Free
Multiple Choice
Q 130Q 130
Figure 9-4.The domestic country is Jamaica.
-Refer to Figure 9-4.With trade,Jamaica
A) imports 150 calculators.
B) imports 250 calculators.
C) exports 100 calculators.
D) exports 250 calculators.
Free
Multiple Choice
Q 131Q 131
Figure 9-4.The domestic country is Jamaica.
-Refer to Figure 9-4.Consumer surplus in Jamaica without trade is
A) $375.
B) $2,000.
C) $2,250.
D) $8,700.
Free
Multiple Choice
Q 132Q 132
Figure 9-4.The domestic country is Jamaica.
-Refer to Figure 9-4.The change in total surplus in Jamaica because of trade is
A) $625,and this is an increase in total surplus.
B) $750,and this is an increase in total surplus.
C) $625,and this is a decrease in total surplus.
D) $750,and this is a decrease in total surplus.
Free
Multiple Choice
Q 133Q 133
Figure 9-4.The domestic country is Jamaica.
-Refer to Figure 9-4.Which of the following statements is accurate?
A) Consumer surplus with trade is $3,200.
B) Producer surplus with trade is $375.
C) The gains from trade amount to $800.
D) The gains from trade are represented on the graph by the area bounded by the points (0,$12),(300,$12),(300,$7)and (0,$7).
Free
Multiple Choice
Q 134Q 134
Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,the United States
A) will become an importer of tomatoes.
B) will become an exporter of tomatoes.
C) may become either an importer or an exporter of tomatoes,but this cannot be determined.
D) will experience increases in both consumer surplus and producer surplus.
Free
Multiple Choice
Q 135Q 135
Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,the price of tomatoes in the United States
A) will increase,and this will cause consumer surplus to decrease.
B) will decrease,and this will cause consumer surplus to increase.
C) will be unaffected,and consumer surplus will be unaffected as well.
D) could increase or decrease or be unaffected;this cannot be determined.
Free
Multiple Choice
Q 136Q 136
Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,the price of tomatoes in the United States
A) will be greater than the world price.
B) will be equal to the world price.
C) will be less than the world price.
D) could be greater than,equal to,or less than the world price;this cannot be determined.
Free
Multiple Choice
Q 137Q 137
Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,U.S.producers of tomatoes
A) will be better off.
B) will be worse off.
C) will be unaffected.
D) will experience a decrease in their collective producer surplus.
Free
Multiple Choice
Q 138Q 138
Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,the
A) price paid by American consumers of tomatoes is unchanged relative to the no-trade situation.
B) total well-being of American producers of tomatoes is diminished relative to the no-trade situation.
C) total well-being of American consumers of tomatoes is enhanced relative to the no-trade situation.
D) total well-being of the United States is enhanced relative to the no-trade situation.
Free
Multiple Choice
Q 139Q 139
Figure 9-5
-Refer to Figure 9-5.The horizontal line at the world price of wagons represents the
A) demand for wagons from the rest of the world.
B) supply of wagons from the rest of the world.
C) level of inefficiency in the domestic market caused by trade.
D) surplus in the domestic wagon market.
Free
Multiple Choice
Q 140Q 140
Figure 9-5
-Refer to Figure 9-5.With trade,this country
A) exports 20 wagons.
B) exports 50 wagons.
C) imports 30 wagons.
D) imports 50 wagons.
Free
Multiple Choice
Q 141Q 141
Figure 9-5
-Refer to Figure 9-5.Without trade,consumer surplus amounts to
A) $210.50.
B) $245.50.
C) $367.50.
D) $607.50.
Free
Multiple Choice
Q 142Q 142
Figure 9-5
-Refer to Figure 9-5.Without trade,producer surplus amounts to
A) $210.
B) $245.
C) $450.
D) $455.
Free
Multiple Choice
Q 143Q 143
Figure 9-5
-Refer to Figure 9-5.Without trade,total surplus amounts to
A) $122.50.
B) $245.
C) $367.50.
D) $612.50.
Free
Multiple Choice
Q 144Q 144
Figure 9-5
-Refer to Figure 9-5.With trade,the price of wagons in this country is
A) $8,with 70 wagons produced in this country,20 of which are exported.
B) $8,with 90 wagons produced in this country,50 of which are exported.
C) $5,with 40 wagons produced in this country and another 30 wagons imported.
D) $5,with 40 wagons produced in this country and another 50 wagons imported.
Free
Multiple Choice
Q 145Q 145
Figure 9-5
-Refer to Figure 9-5.With trade,consumer surplus is
A) $245.
B) $362.50.
C) $367.50.
D) $607.50.
Free
Multiple Choice
Q 146Q 146
Figure 9-5
-Refer to Figure 9-5.With trade,producer surplus is
A) $80.
B) $150.
C) $210.
D) $245.
Free
Multiple Choice
Q 147Q 147
Figure 9-5
-Refer to Figure 9-5.With trade,total surplus is
A) $245.
B) $367.50.
C) $607.50.
D) $687.50.
Free
Multiple Choice
Q 148Q 148
Figure 9-5
-Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by
A) $60.
B) $75.
C) $135.
D) $210.
Free
Multiple Choice
Q 149Q 149
Figure 9-5
-Refer to Figure 9-5.The increase in total surplus resulting from trade is
A) $60,since producer surplus increases by $180 and consumer surplus falls by $240.
B) $60,since consumer surplus increases by $180 and producer surplus falls by $240.
C) $75,since consumer surplus increases by $240 and producer surplus falls by $165.
D) $75,since consumer surplus increases by $300 and producer surplus falls by $225.
Free
Multiple Choice
Q 150Q 150
Figure 9-5
-Refer to Figure 9-5.If this country allows free trade in wagons,
A) consumers will gain and producers will lose.
B) consumers will lose and producers will gain.
C) both consumers and producers will gain.
D) both consumers and producers will lose.
Free
Multiple Choice
Q 151Q 151
Figure 9-5
-Refer to Figure 9-5.If this country allows free trade in wagons,
A) consumers will gain more than producers will lose.
B) producers will gain more than consumers will lose.
C) producers and consumers will both gain equally.
D) producers and consumers will both lose equally.
Free
Multiple Choice
Q 152Q 152
Figure 9-5
-Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons?
A) Incomes of domestic citizens increase,and wagons are a normal good.
B) Within this country,the price of a substitute for wagons decreases.
C) Within this country,the price of a complement to wagons decreases.
D) Wages increase for domestic workers who produce wagons.
Free
Multiple Choice
Q 153Q 153
Figure 9-5
-Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements?
A) The quantity of wagons that this country imports would increase.
B) The quantity of wagons that this country imports would decrease,but the country would still be an importer of wagons.
C) This country would switch from being an importer of wagons to an exporter of wagons.
D) The domestic price without trade would move closer to the world price.
Free
Multiple Choice
Q 154Q 154
Figure 9-6
-Refer to Figure 9-6.Without trade,the equilibrium price of carnations is
A) $8 and the equilibrium quantity is 300.
B) $6 and the equilibrium quantity is 200.
C) $6 and the equilibrium quantity is 400.
D) $4 and the equilibrium quantity is 500.
Free
Multiple Choice
Q 155Q 155
Figure 9-6
-Refer to Figure 9-6.With trade and without a tariff,
A) the domestic price is equal to the world price.
B) carnations are sold at $8 in this market.
C) there is a shortage of 400 carnations in this market.
D) this country imports 200 carnations.
Free
Multiple Choice
Q 156Q 156
Figure 9-6
-Refer to Figure 9-6.Before the tariff is imposed,this country
A) imports 200 carnations.
B) imports 400 carnations.
C) exports 200 carnations.
D) exports 400 carnations.
Free
Multiple Choice
Q 157Q 157
Figure 9-6
-Refer to Figure 9-6.The size of the tariff on carnations is
A) $8 per dozen.
B) $6 per dozen.
C) $4 per dozen.
D) $2 per dozen.
Free
Multiple Choice
Q 158Q 158
Figure 9-6
-Refer to Figure 9-6.The imposition of a tariff on carnations
A) increases the number of carnations imported by 100.
B) increases the number of carnations imported by 200.
C) decreases the number of carnations imported by 200.
D) decreases the number of carnations imported by 400.
Free
Multiple Choice
Q 159Q 159
Figure 9-6
-Refer to Figure 9-6.The amount of revenue collected by the government from the tariff is
A) $200.
B) $400.
C) $500.
D) $600.
Free
Multiple Choice
Q 160Q 160
Figure 9-6
-Refer to Figure 9-6.When a tariff is imposed in the market,domestic producers
A) gain by $100.
B) gain by $200.
C) gain by $300.
D) lose by $100.
Free
Multiple Choice
Q 161Q 161
Figure 9-6
-Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals
A) $100.
B) $200.
C) $400.
D) $500.
Free
Multiple Choice
Q 162Q 162
Figure 9-6
-Refer to Figure 9-6.When the tariff is imposed,domestic consumers
A) lose by $500.
B) lose by $900.
C) gain by $500.
D) gain by $900.
Free
Multiple Choice
Q 163Q 163
Figure 9-6
-The before-trade price of fish in Germany is $8.00 per pound.The world price of fish is $6.00 per pound.Germany is a price-taker in the fish market.If Germany allows trade in fish,then Germany will become an
A) importer of fish and the price of fish in Germany will be $6.00.
B) importer of fish and the price of fish in Germany will be $8.00.
C) exporter of fish and the price of fish in Germany will be $6.00.
D) exporter of fish and the price of fish in Germany will be $8.00.
Free
Multiple Choice
Q 164Q 164
Figure 9-6
-The before-trade price of fish in Denmark is $10.00 per pound.The world price of fish is $6.00 per pound.Denmark is a price-taker in the fish market.If Denmark begins to allow trade in fish,its consumers of fish will become
A) better off,its producers of fish will become better off,and on balance the citizens of Denmark will become better off.
B) worse off,its producers of fish will become better off,and on balance the citizens of Denmark will become worse off.
C) worse off,its producers of fish will become better off,and on balance the citizens of Denmark will become worse off.
D) better off,its producers of fish will become worse off,and on balance the citizens of Denmark will become better off.
Free
Multiple Choice
Q 165Q 165
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are
A) P1 and Q2.
B) P1 and Q1.
C) P0 and Q0.
D) P0 and Q1.
Free
Multiple Choice
Q 166Q 166
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are
A) P1 and Q2.
B) P1 and Q1.
C) P0 and Q0.
D) P3 and Q1.
Free
Multiple Choice
Q 167Q 167
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.With trade,Wales
A) imports Q2 - Q1 units of cheese.
B) exports Q2 - Q1 units of cheese.
C) imports Q2 - Q0 units of cheese.
D) exports Q2 - Q0 units of cheese.
Free
Multiple Choice
Q 168Q 168
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade?
A) Consumer surplus with trade = (1/2)(Q0)(P1 - P0).
B) Consumer surplus with trade = (1/2)(Q0)(P3 - P0).
C) Consumer surplus with trade = (1/2)(Q1)(P3 - P1).
D) None of the above is correct.
Free
Multiple Choice
Q 169Q 169
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?
A) Producer surplus with trade = (1/2)P0Q0.
B) Producer surplus with trade = (1/2)P1Q1.
C) Producer surplus with trade = (1/2)P1Q2.
D) None of the above is correct.
Free
Multiple Choice
Q 170Q 170
Figure 9-7.The figure applies to the nation of Wales and the good is cheese.
-Refer to Figure 9-7.Which of the following is a valid equation for the gains from trade?
A) Gains from trade = (1/2)(P1 - P0)(Q2 - Q1).
B) Gains from trade = (1/2)(P1 - P0)(Q2 - Q0)
C) Gains from trade = (1/2)(P1 - P0)(Q1 + Q2).
D) Gains from trade = (1/2)(Q1)(P3 - P1).
Free
Multiple Choice
Q 171Q 171
Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars.
-Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars
A) after trade is allowed.
B) before trade is allowed.
C) that maximizes total surplus when trade is allowed.
D) that minimizes the well-being of domestic car producers when trade is allowed.
Free
Multiple Choice
Q 172Q 172
Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars.
-Refer to Figure 9-8.The country for which the figure is drawn
A) has a comparative advantage relative to other countries in the production of cars and it will export cars.
B) has a comparative advantage relative to other countries in the production of cars and it will import cars.
C) has a comparative disadvantage relative to other countries in the production of cars and it will export cars.
D) has a comparative disadvantage relative to other countries in the production of cars and it will import cars.
Free
Multiple Choice
Q 173Q 173
Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars.
-Refer to Figure 9-8.When the country for which the figure is drawn allows international trade in cars,
A) consumer surplus increases by the area B.
B) producer surplus decreases by the area B + D.
C) total surplus increases by the area D.
D) All of the above are correct.
Free
Multiple Choice
Q 174Q 174
Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars.
-Refer to Figure 9-8.In the country for which the figure is drawn,total surplus with international trade in cars
A) is represented by the area A + B + C.
B) is represented by the area A + B + D.
C) is smaller than producer surplus without international trade in cars.
D) is larger than total surplus without international trade in cars.
Free
Multiple Choice
Q 175Q 175
Figure 9-9
-Refer to Figure 9-9.Consumer surplus in this market before trade is
A) A.
B) A + B.
C) A + B + D.
D) C.
Free
Multiple Choice
Q 176Q 176
Figure 9-9
-Refer to Figure 9-9.Consumer surplus in this market after trade is
A) A.
B) A + B.
C) A + B + D.
D) C.
Free
Multiple Choice
Q 177Q 177
Figure 9-9
-Refer to Figure 9-9.Producer surplus in this market before trade is
A) A.
B) A + B.
C) B + C + D.
D) C.
Free
Multiple Choice
Q 178Q 178
Figure 9-9
-Refer to Figure 9-9.Producer surplus in this market after trade is
A) A.
B) A + B.
C) B + C + D.
D) C.
Free
Multiple Choice
Q 179Q 179
Figure 9-9
-Refer to Figure 9-9.Total surplus in this market before trade is
A) A + B.
B) A + B + C.
C) A + B + C + D.
D) B + C + D.
Free
Multiple Choice
Q 180Q 180
Figure 9-9
-Refer to Figure 9-9.Total surplus in this market after trade is
A) A + B.
B) A + B + C.
C) A + B + C + D.
D) B + C + D.
Free
Multiple Choice
Q 181Q 181
Figure 9-9
-Refer to Figure 9-9.The change in total surplus in this market because of trade is
A) D,and this area represents a loss of total surplus because of trade.
B) D,and this area represents a gain in total surplus because of trade.
C) B + D,and this area represents a loss of total surplus because of trade.
D) B + D,and this area represents a gain in total surplus because of trade.
Free
Multiple Choice
Q 182Q 182
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.The price and quantity of cameras in Australia before trade is
A) P0 and Q0.
B) P1 and Q1.
C) P2 and Q2.
D) P1 and Q0.
Free
Multiple Choice
Q 183Q 183
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.With trade,the equilibrium price of cameras and the equilibrium quantity of cameras demanded in Australia are
A) P1 and Q1.
B) P1 and Q2.
C) P2 and Q2.
D) P0 and Q0.
Free
Multiple Choice
Q 184Q 184
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.When trade takes place,the quantity Q2 - Q1 is
A) the number of cameras bought and sold in Australia.
B) the number of cameras produced in Australia.
C) the number of cameras exported by Australia.
D) the number of cameras imported by Australia.
Free
Multiple Choice
Q 185Q 185
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.Australia's gains from trade are represented by the area that is bounded by the points
A) (0,P0),(Q0,P0),(Q2,P1),and (0,P1).
B) (0,P1),(0,P2),(Q0,P0),and (Q1,P1).
C) (Q0,P0),(Q2,P1),and (Q1,P1).
D) (0,P0),(0,P2),and (Q0,P0).
Free
Multiple Choice
Q 186Q 186
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.The area bounded by the points (Q0,P0),(Q2,P1),and (Q1,P1)represents
A) Australia's gains from trade.
B) the amount by which Australia's gain in consumer surplus exceeds its loss in producer surplus due to trade.
C) Australia's gain in total surplus due to trade.
D) All of the above are correct.
Free
Multiple Choice
Q 187Q 187
Figure 9-10.The figure applies to the nation of Australia and the good is cameras.
-Refer to Figure 9-10.The area bounded by the points (Q0,P0),(Q2,P1),and (Q1,P1)represents
A) Australia's gains from trade.
B) the amount by which Australia's gain in producer surplus exceeds its loss in consumer surplus due to trade.
C) Australia's loss in total surplus due to trade.
D) All of the above are correct.
Free
Multiple Choice
Q 188Q 188
Figure 9-11
-Refer to Figure 9-11.Consumer surplus in this market before trade is
A) A.
B) B + C.
C) A + B + D.
D) C.
Free
Multiple Choice
Q 189Q 189
Figure 9-11
-Refer to Figure 9-11.Consumer surplus in this market after trade is
A) A.
B) C + B.
C) A + B + D.
D) B + C + D.
Free
Multiple Choice
Q 190Q 190
Figure 9-11
-Refer to Figure 9-11.Producer surplus in this market before trade is
A) C.
B) B + C.
C) A + B + D.
D) B + C + D.
Free
Multiple Choice
Q 191Q 191
Figure 9-11
-Refer to Figure 9-11.Producer surplus in this market after trade is
A) C.
B) C + B.
C) A + B + D.
D) B + C + D.
Free
Multiple Choice
Q 192Q 192
Figure 9-11
-Refer to Figure 9-11.Producer surplus plus consumer surplus in this market before trade is
A) A + B.
B) A + B + C.
C) A + B + C + D.
D) B + C + D.
Free
Multiple Choice
Q 193Q 193
Figure 9-11
-Refer to Figure 9-11.Producer surplus plus consumer surplus in this market after trade is
A) A + B.
B) A + B + C.
C) B + C + D.
D) A + B + C + D.
Free
Multiple Choice
Q 194Q 194
Figure 9-11
-Refer to Figure 9-11.The change in total surplus in this market because of trade is
A) A,and this area represents a loss of total surplus.
B) B,and this area represents a gain in total surplus.
C) C,and this area represents a loss of total surplus.
D) D,and this area represents a gain in total surplus.
Free
Multiple Choice
Q 195Q 195
Figure 9-12
-Refer to Figure 9-12.Equilibrium price and equilibrium quantity without trade are
A) $18 and 400.
B) $18 and 800.
C) $14 and 400.
D) $14 and 600.
Free
Multiple Choice
Q 196Q 196
Figure 9-12
-Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are
A) $18 and 400.
B) $18 and 800.
C) $14 and 400.
D) $14 and 600.
Free
Multiple Choice
Q 197Q 197
Figure 9-12
-Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are
A) 600 and 400.
B) 800 and 400.
C) 400 and 600.
D) 400 and 800.
Free
Multiple Choice
Q 198Q 198
Figure 9-12
-Refer to Figure 9-12.Consumer surplus before trade is
A) $1,600.
B) $2,400.
C) $3,200.
D) $3,600.
Free
Multiple Choice
Q 199Q 199
Figure 9-12
-Refer to Figure 9-12.Consumer surplus after trade is
A) $1,600.
B) $2,400.
C) $3,200.
D) $3,600.
Free
Multiple Choice
Q 200Q 200
Figure 9-12
-Refer to Figure 9-12.Producer surplus before trade is
A) $3,600.
B) $4,400.
C) $5,200.
D) $6,600.
Free
Multiple Choice
Q 201Q 201
Figure 9-12
-Refer to Figure 9-12.Producer surplus after trade is
A) $4,800.
B) $5,600.
C) $6,400.
D) $7,000.
Free
Multiple Choice
Q 202Q 202
Figure 9-12
-Refer to Figure 9-12.With trade allowed,this country
A) exports 200 units of the good.
B) exports 400 units of the good.
C) imports 200 units of the good.
D) exports 800 units of the good.
Free
Multiple Choice
Q 203Q 203
Figure 9-13
-Refer to Figure 9-13.The price and domestic quantity demanded after trade are
A) $8 and 300.
B) $8 and 900.
C) $14 and 900.
D) $14 and 600.
Free
Multiple Choice
Q 204Q 204
Figure 9-13
-Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are
A) 600 and 600.
B) 600 and 300.
C) 300 and 900.
D) 600 and 900.
Free
Multiple Choice
Q 205Q 205
Figure 9-13
-Refer to Figure 9-13.Consumer surplus before trade is
A) $1,600.
B) $,2400.
C) $3,200.
D) $3,600.
Free
Multiple Choice
Q 206Q 206
Figure 9-13
-Refer to Figure 9-13.Consumer surplus after trade is
A) $3,600.
B) $5,400.
C) $7,200.
D) $8,100.
Free
Multiple Choice
Q 207Q 207
Figure 9-13
-Refer to Figure 9-13.Producer surplus before trade is
A) $3,600.
B) $4,400.
C) $5,200.
D) $6,600.
Free
Multiple Choice
Q 208Q 208
Figure 9-13
-Refer to Figure 9-13.With trade,producer surplus is
A) $900.
B) $1,100.
C) $1,500.
D) $2,000.
Free
Multiple Choice
Q 209Q 209
Figure 9-13
-Refer to Figure 9-13.With trade,the country
A) exports 200 units of the good.
B) exports 400 units of the good.
C) imports 400 units of the good.
D) imports 600 units of the good.
Free
Multiple Choice
Q 210Q 210
Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers.
-Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers,
A) consumer surplus for domestic computer consumers decreases.
B) the demand for computers by domestic computer consumers decreases.
C) the losses of the domestic losers outweigh the gains of the domestic winners.
D) domestic computer producers sell fewer computers.
Free
Multiple Choice
Q 211Q 211
Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers.
-Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers,
A) consumer surplus changes from the area A + B + D to the area A.
B) producer surplus changes from the area C to the area B + C + D.
C) total surplus decreases by the area D.
D) All of the above are correct.
Free
Multiple Choice
Q 212Q 212
Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers.
-Refer to Figure 9-14.The country for which the figure is drawn
A) has a comparative advantage relative to other countries in the production of computers and it will export computers.
B) has a comparative advantage relative to other countries in the production of computers and it will import computers.
C) has a comparative disadvantage relative to other countries in the production of computers and it will export computers.
D) has a comparative disadvantage relative to other countries in the production of computers and it will import computers.
Free
Multiple Choice
Q 213Q 213
Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers.
-Refer to Figure 9-14.A result of this country allowing international trade in computers is as follows:
A) The well-being of domestic computer producers is now higher in that they now sell more computers at a higher price per computer.
B) The effect on the well-being of domestic computer consumers is unclear in that they now buy more computers,but at a higher price per computer.
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases,while the effect on domestic consumer surplus is unclear.
D) All of the above are correct.
Free
Multiple Choice
Q 214Q 214
A tariff on a product makes
A) domestic sellers better off and domestic buyers worse off.
B) domestic sellers worse off and domestic buyers worse off.
C) domestic sellers better off and domestic buyers better off.
D) domestic sellers worse off and domestic buyers better off.
Free
Multiple Choice
Q 215Q 215
A tariff on a product
A) is a direct quantitative restriction on the amount of a good that can be imported.
B) increases the domestic quantity supplied.
C) increases domestic consumer surplus.
D) All of the above are correct.
Free
Multiple Choice
Q 216Q 216
A tariff on a product
A) enhances the economic well-being of the domestic economy.
B) increases the domestic quantity supplied.
C) increases the domestic quantity demanded.
D) results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.
Free
Multiple Choice
Q 217Q 217
If the United States imposes a tariff on automobiles,then
A) total surplus in the American automobile market decreases.
B) producer surplus in the American automobile market increases.
C) U.S.imports of foreign automobiles decrease.
D) All of the above are correct.
Free
Multiple Choice
Q 218Q 218
When a country that imports a particular good imposes a tariff on that good,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 219Q 219
When a country that imports a particular good imposes a tariff on that good,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 220Q 220
When a country that imports a particular good imposes an import quota on that good,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 221Q 221
When a country that imports a particular good imposes an import quota on that good,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 222Q 222
A tariff is a tax placed on
A) an exported good and it lowers the domestic price of the good below the world price.
B) an exported good and it ensures that the domestic price of the good stays the same as the world price.
C) an imported good and it lowers the domestic price of the good below the world price.
D) an imported good and it raises the domestic price of the good above the world price.
Free
Multiple Choice
Q 223Q 223
A tariff
A) lowers the domestic price of the exported good below the world price.
B) keeps the domestic price of the exported good the same as the world price.
C) raises the domestic price of the imported good above the world price.
D) lowers the domestic price of the imported good below the world price.
Free
Multiple Choice
Q 224Q 224
When a country moves away from a free trade position and imposes a tariff on imports,it causes
A) a decrease in total surplus in the market.
B) a decrease in producer surplus in the market.
C) an increase in consumer surplus in the market.
D) a decrease in revenue to the government.
Free
Multiple Choice
Q 225Q 225
If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by
A) the area of one triangle.
B) the area of one rectangle.
C) the combined areas of two different triangles.
D) the combined areas of two different rectangles.
Free
Multiple Choice
Q 226Q 226
Suppose Mexico imposes a tariff on lumber.For the tariff to have any effect,it must be the case that
A) Mexico is an exporter of lumber.
B) the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff.
C) the world price without the tariff is less than the price of lumber without trade.
D) the world price without the tariff is greater than the price of lumber without trade.
Free
Multiple Choice
Q 227Q 227
Spain is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Spain imposes a $5 tariff on chips.As a result,
A) Spanish consumers of chips and Spanish producers of chips both gain.
B) Spanish consumers of chips gain and Spanish producers of chips lose.
C) Spanish consumers of chips lose and Spanish producers of chips gain.
D) Spanish consumers of chips and Spanish producers of chips both lose.
Free
Multiple Choice
Q 228Q 228
Denmark is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Denmark imposes a $5 tariff on chips.Which of the following outcomes is possible?
A) More Danish-produced chips are sold in Denmark.
B) More foreign-produced chips are sold in Denmark.
C) Danish consumers of chips become better off.
D) Total surplus in the Danish chip market increases.
Free
Multiple Choice
Q 229Q 229
Chile is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Chile imposes a $7 tariff on chips.Which of the following outcomes is possible?
A) The price of chips in Chile increases to $19;the quantity of Chilean-produced chips decreases;and the quantity of chips imported by Chile decreases.
B) The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases.
C) The price of chips in Chile increases to $19;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases.
D) The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile does not change.
Free
Multiple Choice
Q 230Q 230
Honduras is an importer of goose-down pillows.The world price of these pillows is $50.Honduras imposes a $7 tariff on pillows.Honduras is a price-taker in the pillow market.As a result of the tariff,the price of goose-down pillows in Honduras
A) remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
B) increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
C) increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases.
D) increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.
Free
Multiple Choice
Q 231Q 231
Turkey is an importer of wheat.The world price of a bushel of wheat is $7.Turkey imposes a $3-per-bushel tariff on wheat.Turkey is a price-taker in the wheat market.As a result of the tariff,
A) Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off.
B) Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.
C) Turkish consumers of wheat become better off and Turkish producers of wheat become worse off.
D) Turkish consumers of wheat become better off and Turkish producers of wheat become better off.
Free
Multiple Choice
Q 232Q 232
When the nation of Brownland first permitted trade with other nations,domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.We can conclude that
A) Brownland became an exporter of wheat.
B) consumer surplus in Brownland increased by $3 million.
C) the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left.
D) this example is inconsistent with the economic theory of international trade.
Free
Multiple Choice
Q 233Q 233
When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that
A) Mooseland became an exporter of sugar.
B) the overall economic well-being of participants in the sugar market in Mooseland fell because of trade.
C) consumer surplus in Mooseland increased by $7 million.
D) the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.
Free
Multiple Choice
Q 234Q 234
Figure 9-15
-Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are
A) P1 and Q1.
B) P1 and Q4.
C) P2 and Q2.
D) P2 and Q3.
Free
Multiple Choice
Q 235Q 235
Figure 9-15
-Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are
A) P1 and Q1.
B) P1 and Q4.
C) P2 and Q2.
D) P2 and Q3.
Free
Multiple Choice
Q 236Q 236
Figure 9-15
-Refer to Figure 9-15.With the tariff,the quantity of saddles imported is
A) Q3 - Q1.
B) Q3 - Q2.
C) Q4 - Q1.
D) Q4 - Q2.
Free
Multiple Choice
Q 237Q 237
Figure 9-15
-Refer to Figure 9-15.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by
A) Q2 - Q1.
B) Q3 - Q2.
C) Q4 - Q3.
D) Q4 - Q3 + Q2 - Q1.
Free
Multiple Choice
Q 238Q 238
Figure 9-15
-Refer to Figure 9-15.Consumer surplus with trade and without a tariff is
A) A.
B) A + B.
C) A + C + G.
D) A + B + C + D + E + F.
Free
Multiple Choice
Q 239Q 239
Figure 9-15
-Refer to Figure 9-15.Producer surplus with trade and without a tariff is
A) G.
B) C + G.
C) A + C + G.
D) A + B + C + G.
Free
Multiple Choice
Q 240Q 240
Figure 9-15
-Refer to Figure 9-15.Consumer surplus with the tariff is
A) A.
B) A + B.
C) A + C + G.
D) A + B + C + D +E + F.
Free
Multiple Choice
Q 241Q 241
Figure 9-15
-Refer to Figure 9-15.Producer surplus with the tariff is
A) G.
B) C + G.
C) A + C + G.
D) A + B + C + G.
Free
Multiple Choice
Q 242Q 242
Figure 9-15
-Refer to Figure 9-15.The amount of government revenue created by the tariff is
A) B.
B) E.
C) D + F.
D) B + D + E + F.
Free
Multiple Choice
Q 243Q 243
Figure 9-15
-Refer to Figure 9-15.As a result of the tariff,there is a deadweight loss that amounts to
A) B.
B) E.
C) D + F.
D) B + D + E + F.
Free
Multiple Choice
Q 244Q 244
Figure 9-15
-Refer to Figure 9-15.For the saddle market,area B represents
A) government's revenue from the tariff.
B) the deadweight loss of the tariff.
C) the increase in producer surplus,relative to the free-trade situation,as a result of the tariff.
D) None of the above is correct.
Free
Multiple Choice
Q 245Q 245
Figure 9-15
-Refer to Figure 9-15.For the saddle market,area E represents
A) government's revenue from the tariff.
B) producer surplus after the tariff becomes effective.
C) the decrease in consumer surplus,relative to the free-trade situation,as a result of the tariff.
D) the decrease in total surplus,relative to the free-trade situation,as a result of the tariff.
Free
Multiple Choice
Q 246Q 246
Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.Government revenue raised by the tariff is represented by the area
A) E.
B) B + E.
C) D + E + F.
D) B + D + E + F.
Free
Multiple Choice
Q 247Q 247
Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.The tariff
A) decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.
B) decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F.
C) increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.
D) increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.
Free
Multiple Choice
Q 248Q 248
Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.The tariff
A) decreases producer surplus by the area C,decreases consumer surplus by the area C + D + E,and decreases total surplus by the area D + F.
B) increases producer surplus by the area C,decreases consumer surplus by the area C + D + E + F,and decreases total surplus by the area D + F..
C) creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
D) increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.
Free
Multiple Choice
Q 249Q 249
Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area
A) B.
B) D + F.
C) D + E + F.
D) B + D + E + F.
Free
Multiple Choice
Q 250Q 250
Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.
-Refer to Figure 9-16.The area C + D + E + F represents
A) the decrease in consumer surplus caused by the tariff.
B) the decrease in total surplus caused by the tariff.
C) the deadweight loss of the tariff minus government revenue raised by the tariff.
D) the deadweight loss of the tariff plus government revenue raised by the tariff.
Free
Multiple Choice
Q 251Q 251
A quota is
A) a tax placed on imports.
B) a limit on the quantity of imports.
C) a tax on exports to other countries.
D) an excess of exports over imports.
Free
Multiple Choice
Q 252Q 252
Both tariffs and import quotas
A) increase the quantity of imports and raise the domestic price of the good.
B) increase the quantity of imports and lower the domestic price of the good.
C) decrease the quantity of imports and raise the domestic price of the good.
D) decrease the quantity of imports and lower the domestic price of the good.
Free
Multiple Choice
Q 253Q 253
A major difference between tariffs and import quotas is that
A) tariffs create deadweight losses,but import quotas do not.
B) tariffs help domestic consumers,and import quotas help domestic producers.
C) tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import.
D) All of the above are correct.
Free
Multiple Choice
Q 254Q 254
Tariffs and quotas are different in the sense that
A) tariffs cause deadweight losses,while quotas do not cause deadweight losses.
B) tariffs raise revenue for the government,while quotas do not raise revenue for the government.
C) tariffs enhance the well-being of domestic consumers,while quotas diminish the well-being of domestic consumers.
D) tariffs enhance the well-being of domestic producers,while quotas diminish the well-being of domestic producers.
Free
Multiple Choice
Q 255Q 255
Import quotas and tariffs produce similar results.Which of the following is not one of those results?
A) The domestic price of the good increases.
B) Consumer surplus of domestic consumers increases.
C) Producer surplus of domestic producers increases.
D) A deadweight loss is experienced by the domestic country.
Free
Multiple Choice
Q 256Q 256
Import quotas and tariffs produce some common results.Which of the following is not one of those common results?
A) Total surplus in the domestic country falls.
B) Producer surplus in the domestic country increases.
C) The domestic country experiences a deadweight loss.
D) Revenue is raised for the domestic government.
Free
Multiple Choice
Q 257Q 257
An import quota
A) is preferable to a tariff since an import quota does not create a deadweight loss.
B) is a tax on imported goods.
C) reduces the welfare of domestic consumers.
D) reduces the welfare of domestic producers.
Free
Multiple Choice
Q 258Q 258
The nation of Zelzar has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Zelzar's new free-trade policy has
A) increased consumer surplus and producer surplus in the incense market.
B) increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
C) decreased consumer surplus in both the steel and rug markets.
D) decreased consumer surplus in the steel market and increased total surplus in the incense market.
Free
Multiple Choice
Q 259Q 259
The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now
A) higher in the steel market,lower in the rice market,and unchanged in the TV market.
B) higher in the rice and steel markets,and unchanged in the TV market.
C) lower in the rice and TV markets,and higher in the steel market.
D) lower in the rice and steel markets,and the same in the TV market.
Free
Multiple Choice
Q 260Q 260
Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy?
A) producers of incense and consumers of steel
B) consumers of all three goods
C) consumers of incense and producers of rugs
D) producers of steel and consumers of incense
Free
Multiple Choice
Q 261Q 261
The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes
A) benefit the United States as a whole,because they generate revenue for the government.In addition,because the goods are priced below cost,the taxes do not harm domestic consumers.
B) benefit the United States as a whole,because they generate revenue for the government and increase producer surplus.
C) harm the United States as a whole,because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue.
D) harm the United States as a whole,because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.
Free
Multiple Choice
Q 262Q 262
Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called
A) marginal cost of production.
B) marginal benefit of size.
C) economies of scale.
D) economies of production.
Free
Multiple Choice
Q 263Q 263
Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade
A) can realize economies of scale more fully.
B) have greater market power.
C) experience larger producer surplus.
D) All of the above are correct.
Free
Multiple Choice
Q 264Q 264
Figure 9-17
-Refer to Figure 9-17.Without trade,consumer surplus is
A) $100 and producer surplus is $50.
B) $100 and producer surplus is $200.
C) $400 and producer surplus is $50.
D) $400 and producer surplus is $200.
Free
Multiple Choice
Q 265Q 265
Figure 9-17
-Refer to Figure 9-17.With free trade,consumer surplus is
A) $100 and producer surplus is $50.
B) $100 and producer surplus is $200.
C) $400 and producer surplus is $50.
D) $400 and producer surplus is $200.
Free
Multiple Choice
Q 266Q 266
Figure 9-17
-Refer to Figure 9-17.With trade and a tariff,consumer surplus is
A) $202 and producer surplus is $50.
B) $202 and producer surplus is $98.
C) $256 and producer surplus is $50.
D) $256 and producer surplus is $98.
Free
Multiple Choice
Q 267Q 267
Figure 9-17
-Refer to Figure 9-17.Without trade,total surplus is
A) $150.
B) $300.
C) $450.
D) $600.
Free
Multiple Choice
Q 268Q 268
Figure 9-17
-Refer to Figure 9-17.With free trade,total surplus is
A) $150.
B) $300.
C) $450.
D) $600.
Free
Multiple Choice
Q 269Q 269
Figure 9-17
-Refer to Figure 9-17.With trade and a tariff,total surplus is
A) $306.
B) $354.
C) $378.
D) $426.
Free
Multiple Choice
Q 270Q 270
Figure 9-17
-Refer to Figure 9-17.With free trade,the country imports
A) 5 units of the good.
B) 10 units of the good.
C) 15 units of the good.
D) 20 units of the good.
Free
Multiple Choice
Q 271Q 271
Figure 9-17
-Refer to Figure 9-17.The imposition of the tariff
A) decreases imports of the good by 4 units and increases domestic production of the good by 2 units.
B) decreases imports of the good by 4 units and increases domestic production of the good by 4 units.
C) decreases imports of the good by 6 units and increases domestic production of the good by 2 units.
D) decreases imports of the good by 6 units and increases domestic production of the good by 6 units.
Free
Multiple Choice
Q 272Q 272
Figure 9-17
-Refer to Figure 9-17.The amount of revenue collected by the government from the tariff is
A) $8.
B) $72.
C) $180.
D) $252.
Free
Multiple Choice
Q 273Q 273
Figure 9-17
-Refer to Figure 9-17.The deadweight loss caused by the tariff is
A) $24.
B) $72.
C) $96.
D) $150.
Free
Multiple Choice
Q 274Q 274
Figure 9-17
-Refer to Figure 9-17.When comparing no trade to free trade,the gain from trade is
A) $72.
B) $100.
C) $150.
D) $450.
Free
Multiple Choice
Q 275Q 275
Figure 9-17
-Refer to Figure 9-17.When the country moves from no trade to free trade,consumer surplus
A) increases by $300 and producer surplus increases by $150.
B) increases by $300 and producer surplus decreases by $150.
C) decreases by $300 and producer surplus increases by $150.
D) decreases by $300 and producer surplus decreases by $150.
Free
Multiple Choice
Q 276Q 276
Figure 9-17
-Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus
A) decreases by $144 and producer surplus does not change.
B) decreases by $144 and producer surplus increases by $48.
C) decreases by $198 and producer surplus does not change.
D) decreases by $198 and producer surplus increases by $48.
Free
Multiple Choice
Q 277Q 277
When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that
A) both producers of automobiles and consumers of automobiles in that nation became better off as a result.
B) the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation.
C) the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation.
D) even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased.
Free
Multiple Choice
Q 278Q 278
After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat,the nation began importing wheat.As a result,total surplus in the wheat market increased by $10 million.Which of the following changes could have occurred as well?
A) The price of wheat in that nation increased with the adoption of the new policy.
B) The domestic quantity of wheat supplied increased with the adoption of the new policy.
C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million.
D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.
Free
Multiple Choice
Q 279Q 279
When the nation of Isoland opens up its steel market to international trade,that change
A) creates winners and losers,regardless of whether Isoland ends up exporting or importing steel.
B) results in a decrease in total surplus,regardless of whether Isoland ends up exporting or importing steel.
C) creates winners,but no losers,if Isoland ends up exporting steel.
D) creates losers,but no winners,if Isoland ends up importing steel.
Free
Multiple Choice
Q 280Q 280
Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?
A) The price of paper in Republica decreased as a result of the policy change.
B) Republica began exporting paper as a result of the policy change.
C) The domestic demand curve for paper shifted to the right as a result of the policy change.
D) The domestic quantity of paper demanded increased as a result of the policy change.
Free
Multiple Choice
Q 281Q 281
Domestic producers of a good become better off,and domestic consumers of a good become worse off,when a country begins allowing international trade in that good and
A) the country becomes an importer of the good as a result.
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed.
C) other countries have a comparative advantage,relative to the country in question,in producing the good.
D) total surplus does not change as a result.
Free
Multiple Choice
Q 282Q 282
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade and if the world price of peaches is $5,then
A) Isoland has a comparative advantage,relative to other countries,in producing peaches.
B) Isoland will import peaches.
C) consumer surplus with trade exceeds consumer surplus without trade.
D) All of the above are correct.
Free
Multiple Choice
Q 283Q 283
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade and if the world price of peaches is $3,then
A) Isoland has a comparative advantage,relative to other countries,in producing peaches.
B) Isoland will export peaches.
C) producer surplus with trade exceeds producer surplus without trade.
D) consumer surplus with trade exceeds consumer surplus without trade.
Free
Multiple Choice
Q 284Q 284
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade,then it will be an exporter of peaches if and only if the world price of peaches is
A) above $2.
B) below $4.
C) above $4.
D) below $7.
Free
Multiple Choice
Q 285Q 285
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade and the world price of peaches is $5,then
A) producer surplus will be smaller than it would be if Isoland banned trade.
B) consumer surplus will be smaller than it would be if Isoland banned trade.
C) the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied.
D) Isoland will be an importer of peaches.
Free
Multiple Choice
Q 286Q 286
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in
A) a decrease in consumer surplus.
B) an increase in producer surplus.
C) an increase in total surplus.
D) All of the above are correct.
Free
Multiple Choice
Q 287Q 287
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in a
A) $25 decrease in consumer surplus.
B) $20 increase in consumer surplus.
C) $25 decrease in producer surplus.
D) $20 increase in producer surplus.
Free
Multiple Choice
Q 288Q 288
Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $3,then the policy change results in a
A) $15.00 decrease in producer surplus.
B) $45.00 increase in consumer surplus.
C) $20.00 increase in total surplus.
D) $12.50 increase in total surplus.
Free
Multiple Choice
Q 289Q 289
Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible?
A) Consumer surplus decreases by $100;producer surplus increases by $100;and government revenue from the tariff amounts to $50.
B) Consumer surplus decreases by $200;producer surplus increases by $100;and government revenue from the tariff amounts to $50.
C) Consumer surplus increases by $100;producer surplus decreases by $200;and government revenue from the tariff amounts to $50.
D) Consumer surplus decreases by $50;producer surplus increases by $200;and government revenue from the tariff amounts to $150.
Free
Multiple Choice
Q 290Q 290
Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that
A) the quantity of wine demanded by France,with the tariff,is 18 million bottles per year.
B) the quantity of wine demanded by France,without the tariff,would be 24 million bottles per year.
C) the amount of the deadweight loss is 24 million euros per year.
D) the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.
Free
Multiple Choice
Q 291Q 291
For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that
A) an import quota has no effect on consumer surplus,while a tariff decreases consumer surplus.
B) an import quota has no effect on producer surplus,while a tariff decreases producer surplus.
C) a tariff raises total surplus,while an import quota does not.
D) a tariff raises revenue for that country's government,while an import quota does not.
Free
Multiple Choice
Q 292Q 292
For any country that allows free trade,
A) domestic quantity demanded is equal to domestic quantity supplied at the world price.
B) domestic quantity demanded is greater than domestic quantity supplied at the world price.
C) both producers and consumers in that country gain when domestic products are exported,but both groups lose when foreign products are imported.
D) the domestic price is equal to the world price.
Free
Multiple Choice
Q 293Q 293
Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles.
-Refer to Figure 9-19.With free trade,the country for which the figure is drawn will
A) export 30 units of textiles.
B) export 50 units of textiles.
C) import 30 units of textiles.
D) import 50 units of textiles.
Free
Multiple Choice
Q 294Q 294
Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles.
-Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to
A) $210.
B) $320.
C) $405.
D) $910.
Free
Multiple Choice
Q 295Q 295
When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 296Q 296
When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 297Q 297
When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 298Q 298
When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 299Q 299
When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 300Q 300
When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,
A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 301Q 301
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
A) consumer surplus increases and total surplus increases in the market for that good.
B) consumer surplus increases and total surplus decreases in the market for that good.
C) consumer surplus decreases and total surplus increases in the market for that good.
D) consumer surplus decreases and total surplus decreases in the market for that good.
Free
Multiple Choice
Q 302Q 302
Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade;he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that
A) there is no evidence that any worker ever lost his or her job because of free trade.
B) unemployment of labor is not a serious problem relative to other economic problems.
C) the gains from trade are based on comparative advantage.
D) the gains from trade are based on absolute advantage.
Free
Multiple Choice
Q 303Q 303
"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the
A) national-security argument.
B) infant-industry argument.
C) unfair-competition argument.
D) jobs argument.
Free
Multiple Choice
Q 304Q 304
One should be especially wary of the national-security argument for restricting trade when that argument is made by
A) representatives of industry.
B) representatives of the defense establishment.
C) members of households.
D) foreign government officials.
Free
Multiple Choice
Q 305Q 305
The "unfair-competition" argument might be cited by an American who believes that
A) almost every country has a comparative advantage,relative to the United States,in producing almost all goods.
B) young industries should be protected against foreign competition until they become profitable.
C) the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost.
D) the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.
Free
Multiple Choice
Q 306Q 306
If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,the United States will be
A) better off no matter how Germany responds.
B) better off if Germany gives in,and will be no worse off if it doesn't.
C) worse off if Germany doesn't give in to the threat.
D) worse off no matter how Germany responds.
Free
Multiple Choice
Q 307Q 307
Which of the following arguments for trade restrictions is often advanced?
A) Trade restrictions make all Americans better off.
B) Trade restrictions increase economic efficiency.
C) Trade restrictions are necessary for economic growth.
D) Trade restrictions are sometimes necessary for national security.
Free
Multiple Choice
Q 308Q 308
About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?
A) 54 percent
B) 72 percent
C) 89 percent
D) 97 percent
Free
Multiple Choice
Q 309Q 309
At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?
A) The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States,reduce producer surplus for the United States,and harm foreign sugar producers.
B) The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States,reduce consumer surplus for the United States,and harm foreign sugar producers.
C) The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States,increase consumer surplus for the United States,and benefit foreign sugar producers.
D) U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.
Free
Multiple Choice
Q 310Q 310
Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany
A) may prompt German farmers to invoke the unfair-competition argument.
B) increase the consumer surplus of German buyers of wheat.
C) increase the total surplus of the German people.
D) All of the above are correct.
Free
Multiple Choice
Q 311Q 311
Senator Blowhard represents a state in which many textile firms are located.He wants to impose tariffs on all imported textiles.Which of the following is the least likely consequence of such tariffs?
A) Domestic textile buyers will lose consumer surplus,have less variety,and will pay higher prices.
B) Domestic textile sellers will gain producer surplus.
C) Domestic textile sellers will have a higher rate of technological advance.
D) Domestic textile sellers will have more market power.
Free
Multiple Choice
Q 312Q 312
Countries that restrict foreign trade are likely to
A) forgo the additional surplus that trade allows,but will probably enjoy economies of scale.
B) forgo the additional surplus that trade allows,but will be compensated by a higher rate of technological change.
C) forgo the additional surplus that trade allows,but will have a lower rate of unemployment.
D) have more firms with domestic market power.
Free
Multiple Choice
Q 313Q 313
Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to
A) cause these factories to pay the U.S.minimum wage.
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages.
C) increase poverty in poor countries and benefit U.S.firms which compete with these imports.
D) harm U.S.firms which compete with these imports.
Free
Multiple Choice
Q 314Q 314
Several arguments for restricting trade have been advanced.Those arguments do not include
A) the jobs argument.
B) the protection-as-a-bargaining-chip argument.
C) the no-deadweight-loss argument.
D) the infant-industry argument.
Free
Multiple Choice
Q 315Q 315
Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that
A) foreign competition may cause unemployment in import-competing industries,but the effect is temporary because other industries,especially exporting industries,will be expanding.
B) foreign competition may cause unemployment in import-competing industries,but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
C) the critics are correct,so countries must protect their industries with tariffs or quotas.
D) foreign competition may cause unemployment in import-competing industries,but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.
Free
Multiple Choice
Q 316Q 316
Which of the following is not a commonly-advanced argument for trade restrictions?
A) the jobs argument
B) the national-security argument
C) the infant-industry argument
D) the efficiency argument
Free
Multiple Choice
Q 317Q 317
In a December 2007 New York Times column,Paul Krugman noted that
A) it is difficult to find instances of trade between high-wage countries in the modern era.
B) it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era.
C) the United States now imports more oil and other raw materials from other advanced countries than from the third world.
D) the United States now imports more manufactured goods from the third world than from other advanced countries.
Free
Multiple Choice
Q 318Q 318
Workers displaced by trade eventually find jobs in
A) another country.
B) the government sector.
C) the industries in which the country has a comparative advantage.
D) a different company in the same industry.
Free
Multiple Choice
Q 319Q 319
The infant-industry argument
A) is based on the belief that protecting industries when they are young will pay off later.
B) is based on the belief that protecting industries producing goods and services for infants is necessary if a country is to have healthy children.
C) has the support of most economists.
D) is an argument that is advanced by advocates of free trade.
Free
Multiple Choice
Q 320Q 320
Which of the following is the most accurate statement?
A) Protection is necessary in order for young industries to grow up and be successful.
B) Protection is not necessary for an industry to grow.
C) Protection is necessary because if young industries are not protected,they may suffer losses.
D) Protection may not always be necessary for infant industries,but it has proven to be useful in most cases.
Free
Multiple Choice
Q 321Q 321
If the Japanese steel industry subsidizes the steel that it sells to the United States,the
A) United States should protect its domestic steel industry from this unfair competition.
B) harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Japanese steel.
C) harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel.
D) United States should subsidize the products it sells to Japan.
Free
Multiple Choice
Q 322Q 322
The two basic approaches that a country can take as a means to achieve free trade are the
A) unilateral approach and the multilateral approach.
B) short-run approach and the long-run approach.
C) continental approach and the global approach.
D) industry approach and the security approach.
Free
Multiple Choice
Q 323Q 323
When a country takes a multilateral approach to free trade,it
A) removes trade restrictions on its own.
B) reduces its trade restrictions while other countries do the same.
C) does not remove trade restrictions no matter what other countries do.
D) is willing to trade with multiple countries at once.
Free
Multiple Choice
Q 324Q 324
Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?
A) A multilateral approach can reduce trade restrictions abroad as well as at home.
B) A multilateral approach has the potential to result in freer trade.
C) A multilateral approach requires the agreement of two or more nations.
D) A multilateral approach may have political advantages.
Free
Multiple Choice
Q 325Q 325
When a country takes a unilateral approach to free trade,it
A) removes trade restrictions on its own.
B) reduces its trade restrictions while other countries do the same.
C) does not remove trade restrictions no matter what other countries do.
D) is willing to trade with multiple countries at once.
Free
Multiple Choice
Q 326Q 326
A possible outcome of the multilateral approach to free trade is that such an approach can
A) win political support when a unilateral approach cannot.
B) result in more restricted trade than under a unilateral approach,when international negotiations fail.
C) result in drastic reductions in tariffs for many countries.
D) All of the above are correct.
Free
Multiple Choice
Q 327Q 327
Which of the following assertions is not correct about the multilateral approach to free trade?
A) The multilateral approach has the potential to result in freer trade than does the unilateral approach.
B) The multilateral approach may have a political advantage over the unilateral approach.
C) The multilateral approach is simpler than the unilateral approach.
D) NAFTA and GATT both represent multilateral approaches to free trade.
Free
Multiple Choice
Q 328Q 328
The North American Free Trade Agreement
A) is an example of the unilateral approach to free trade.
B) eliminated tariffs on imports to North America from the rest of the world.
C) reduced trade restrictions among Canada,Mexico and the United States.
D) All of the above are correct.
Free
Multiple Choice
Q 329Q 329
Since World War II,GATT has been responsible for reducing the average tariff among member countries from about
A) 40 percent to about 5 percent.
B) 40 percent to about 20 percent.
C) 80 percent to about 20 percent.
D) 20 percent to about 10 percent.
Free
Multiple Choice
Q 330Q 330
The General Agreement on Tariffs and Trade (GATT)was initiated in response to
A) in increase in exports of low-priced goods from developing countries to developed countries.
B) the replacement of manufacturing jobs with service jobs in developed countries.
C) economic dislocations caused by the North American Free Trade Agreement (NAFTA)in the 1990s.
D) high tariffs imposed during the Great Depression of the 1930s.
Free
Multiple Choice
Q 331Q 331
The rules established under GATT are enforced by the
A) governments of the nations that are involved in GATT.
B) North American Free Trade Association.
C) World Trade Organization.
D) European Union.
Free
Multiple Choice
Q 332Q 332
In December 2007,the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy.Of those surveyed,
A) 57 percent said free international trade helped the economy.
B) 27 percent said free international trade helped the economy.
C) 30 percent said free international trade hurt the economy.
D) 16 percent said free international trade hurt the economy.
Free
Multiple Choice
Q 333Q 333
Most economists view the United States' experience with trade as
A) one from which no firm conclusions about the virtues of free trade can be reached,due to the relatively short history of international trade in the U.S.
B) one from which no firm conclusions about the virtues of free trade can be reached,due to the lack of trade within the U.S.throughout most of the early history of the U.S.
C) an ongoing experiment that confirms the virtues of free trade.
D) an ongoing experiment that calls into serious question the notion that free trade enhances the economic well-being of a nation.
Free
Multiple Choice